In this paper, we provide an empirical analysis of the impact of monitoring and social ties within group lending programs on moral hazard behavior of its participants, based on data from an extensive questionnaire held in Eritrea among participants of 102 groups. We find support for the fact...

Claessens, et al. (2001) empirically investigate the impact of foreign bank entry on domestic banking markets. They show that foreign bank entry reduces income, profits and costs of domestic banks. They conclude that foreign entry improves the functioning of national banking markets through...

This paper derives optimal loan policies under asymmetric information where banks offer loan contracts of long and short duration, backed or unbacked with collateral. The main novelty of the paper is that it analyzes a setting in which high quality firms use collateral as a complementary device...

We conducted a survey in 2001 among members and group leaders of borrowers who accessed loans from two microcredit programs in Eritrea. Using the results from this survey, this paper aims to provide new insights into the empirical relevance of the homogeneous matching hypothesis for microcredit...

This note argues that the joint liability contracting equilibria worked out in Ghatak(2000) have a serious drawback in that, even though incentive compatible ex ante, they violate ex post rationality. For such contracts to be feasible, banks should be able to extract more under failure than...

We examine the effect of business group affiliation on corporate investment behavior in India. We use a data set containing 684 Indian listed companies for the 1989-1997 period. We estimate a simple investment equation and find evidence that cash flow has a positive effect on investment spending...

We investigate whether the financial system dampens or exacerbates monetary shocks of inflation uncertainty to the economy. Our GMM-estimates for 88 countries over a period of 25 years show that inflation uncertainty has a positive and significant impact on the volatility of economic growth....

This paper investigates the effect of demand uncertainty on the capital-labour ratio of non-financial firms in Poland in order to infer the firms’ risk behaviour. A generic model is used to characterise a utility maximising firm in a transition economy with demand uncertainty and imperfect...